A Study On The Investment Decision-Making Of Telecommunications Industry Under The Uncertainty Conditions

Telecommunications industry now has become one of national economy foundational industries after 30 years of development, and one of key industries of the country's economic development strategy.In recent years, the amount of annual investment in fixed assets of telecommunication industry has exceeded 2000 billion Yuan. It reached 295.37 billion Yuan in 2008, grew 29.6% compared to 2007. Along with a new round telecommunication reorganization plan's settling down, three 3G's licenses were issued in early 2009, which means that a new round of investment upsurge kicks off.As a typical dense capital-technology, the fast technological progress, large amount of investment, and long period of construction in telecommunications industry, which can put the enormous influence on the national economy. At the same time, the telecommunications investment is a dynamic system process, which is associated with complex and ever-changing variables. Risks and uncertainties run through the whole process in the construction phase or operational phase of the project, and even more under the competitive environment. Therefore it is necessary to carry out the scientific decision-making to the telecommunications industry investments in order to safeguard the health, stable and sustainable development of the telecommunications industry.The present investment decision-making in the telecommunications industry mainly combines with the traditional theory of investment decision-making, of which Discounted Cash Flow (DCF) is the most widely used. The most prominent defect of this method does not deal effectively with the management flexibility and strategic value which are involved in project investment. However, today's telecommunications industry faces many uncertainties: the demand for telecommunication services, the development of technological progress, the prospects of 3G, telecommunications regulatory policy, which enable telecommunication investment much more uncertainty and investment risks. In this case, it is difficult to describe correctly the value of the project by evaluating telecommunications investment projects based on the DCF method. This dissertation, based on real option theory, combined with the characteristics of investment in the telecommunications industry: Investment Irreversibility, uncertainty of future state, as well as the flexibility of management, carries out in-depth, systematic study on the investment decision-making of the telecommunications industry under the conditions of uncertainty.First, based on the analysis of investment status quo in the telecommunications industry and Polynomial Distributed Lags (PDLs) model, the investment uncertainties in the telecommunications industry are studied. This dissertation points out the three main factors which impact telecommunications investment: the demand uncertainty, technological progress uncertainty, and government regulation uncertainty, carries on the demonstration analysis, and then provides following sections with a starting point.Second, decision-making model for optimal investment time is introduced, which is based on the demand stochastic uncertainty of the telecommunications industry, takes investment time for decision-making variables, and does not take into account the hypothesis conditions of mutual impact. Based on this model and combined with historical data of telecommunications industry, the numerical calculus is carried out. And the investment rules are given out, after the study of the model parameters on the impact of the investment decision-making time.Third, this dissertation considers marginal costs equal to marginal returns idea, presents the capacity investment rule, simultaneously follows anti-demand function from decision-making model for optimal investment time, takes investment capacity for decision-making variables, does not take into account the hypothesis conditions of mutual impact, finally constitutes the decision-making model for investment capacity. At the same time, combined the decision-making model for investment capacity with the decision-making model for optimal investment time, the investment decision-making model is founded under the conditions of demand uncertainty.Fourth, closely combined with the characteristics of technological progress of the telecommunications industry, without taking into account the hypothesis conditions of mutual impact, this dissertation studies operators how to make investment decisions when operators face a new generation of future technology. According to the new technology acceptance efficiency practices of operators, this dissertation takes investment time for decision-making variables, and does not take into account the hypothesis conditions of mutual impact, combines with the technological progress stochastic characteristics, builds the decision-making model for new technology under the uncertainty conditions of both technological progress and new technology acceptance efficiency.Fifth, telecommunication project investments are presented property of real options under the uncertainty conditions of government regulation policy. Combined with the stochastic characteristics of government regulation policy, the decision-making model is established, and then the impacts of model various parameters on the investment decision-making are considered.Finally, the full text main content and the innovations are summarized, and the directions for further research are pointed out.